Silver Strengthens Ahead of Fed, US Dollar Remains Under Pressure
Silver prices strengthened on Tuesday (June 16), maintaining their rebound amid a weakening US dollar and falling oil prices. Based on the latest spot price, XAG/USD was around $70.19 per ounce, with a daily trading range of $69.07 to $71.22.
Silver's rise occurred as market participants adjusted their positions ahead of the Federal Reserve's monetary policy decision on Wednesday. Like gold, silver is a non-yielding asset, making its outlook sensitive to interest rate expectations, the direction of bond yields, and US dollar movements.
Market attention was also focused on diplomatic developments between the US and Iran. US President Donald Trump stated that the text of the agreement would be released in the next few days, and the Strait of Hormuz is expected to fully reopen on Friday. However, Hezbollah's statement that it received assurances from Tehran that the final nuclear deal would not be signed without Israel's withdrawal from Lebanon suggests geopolitical risks have not fully subsided.
The relative improvement in the geopolitical environment has partially reduced demand for safe-haven assets. However, the impact on precious metals remains limited as investors await the details of the agreement before making broader position adjustments. In this context, silver remains supported by the combination of a weaker dollar and expectations of looser monetary policy.
The decline in oil prices has also boosted market sentiment, as lower energy costs can ease global inflationary pressures. If inflationary pressures subside, central banks have more room to maintain policy without additional interest rate hikes. This transmission is important for silver, as expectations of lower interest rates tend to reduce the opportunity cost of holding non-yielding assets.
On the data front, the US dollar remains under pressure after labor data showed a slowdown in hiring. US private sector job additions averaged 25,500 per week in the four weeks to May 30, down from 29,000 previously. This slowdown reinforces expectations that the labor market is less robust than before, limiting support for the greenback.
The market's next focus will be on the Fed statement, the latest economic projections, the direction of the US dollar, and the details of the US-Iran deal. Signals that the Fed sees no urgency for additional interest rate hikes this year could maintain support for silver, while a hawkish tone or a stronger US dollar could potentially limit its upside. (arl)
Source: Newsmaker.id
